Risk & Regulation Report - February 23rd Edition
Risk Management Solutions Group
RMSG provides risk, regulatory compliance, data analytics, and credit consulting services to financial institutions.
Greetings, readers!
The February 23rd edition of the Risk & Regulation Report summarizes the most important recent developments in risk management, regulatory compliance, and cybersecurity that affect financial institutions.
Here are the latest happenings:
CFPB Secures $12M from Foreclosure Relief Scam Leaders
On February 8, 2024, the CFPB successfully concluded an enforcement action against the operators of a foreclosure relief scam, securing $12 million for consumer redress and penalties. The scam, led by Consumer First Legal Group, LLC and attorneys Thomas G. Macey, Jeffrey J. Aleman, Jason Searns, and Harold E. Stafford, involved charging illegal advance fees to homeowners in financial distress for unprovided legal services. This resolution is the culmination of a multi-agency crackdown initiated in 2014 involving the CFPB, FTC, and 15 states. The settlement includes $10.9 million for consumer redress and a $1.1 million penalty, with the defendants also facing industry bans of 8 or 5 years.
For more information, visit: https://www.consumerfinance.gov/about-us/newsroom/cfpb-secures-12-million-from-ringleaders-of-foreclosure-relief-scam/
FFIEC Issues Statement on Valuation Bias in Residential Lending
On February 12, 2024, the FFIEC, representing the Federal Reserve Board, FDIC, OCC, CFPB, NCUA, and the State Liaison Committee, released a Statement on Examination Principles Related to Valuation Discrimination and Bias in Residential Lending. Aimed at mitigating risks of discrimination or bias and ensuring credible valuations in residential real estate lending, the statement emphasizes the importance of real estate valuations in underwriting and the potential for valuation discrimination or bias to harm consumers and communities. It outlines the role of examiners in assessing compliance and risk management practices to identify and mitigate such biases. Institutions are encouraged to establish formal valuation review programs to detect and address deficiencies, supported by the Interagency Appraisal and Evaluation Guidelines.
The statement clarifies that it is not new guidance but provides transparency into the examination process and supports risk-focused examination work.
For more information, visit: https://files.consumerfinance.gov/f/documents/cfpb_ffiec-statement-on-exam-principles_2024-02.pdf
FinCEN Proposes AML/CFT Requirements for Investment Advisers
On February 15, 2024, FinCEN announced a Notice of Proposed Rulemaking (NPRM) that will require certain investment advisers to adhere to Anti-Money Laundering and Countering the Financing of Terrorism ("AML/CFT") protocols under the Bank Secrecy Act ("BSA"). This rule mandates registered investment advisers and exempt reporting advisers to the SEC to establish risk-based AML/CFT programs, report suspicious activities, and comply with recordkeeping obligations. By classifying these advisers as "financial institutions" under the BSA,
the rule aims to close gaps in AML/CFT coverage across the sector, preventing illicit finance practices. FinCEN also proposes delegating examination authority to the SEC, leveraging its regulatory expertise. This move follows a Treasury risk assessment highlighting the sector's vulnerabilities to illicit finance.
Public feedback is invited until April 15, 2025.
For more information, visit: https://www.federalregister.gov/documents/2024/02/15/2024-02854/financial-crimes-enforcement-network-anti-money-launderingcountering-the-financing-of-terrorism
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FinCEN Proposes AML Regulations for Residential Real Estate Transfers
On February 15, 2024, FinCEN announced a proposed rule in the Federal Register mandating reporting and recordkeeping for non-financed residential real estate transfers to legal entities and trusts. This rule aims to combat money laundering by requiring Real Estate Reports for certain transactions, excluding direct transfers to individuals. The initiative is designed to enhance the Treasury and law enforcement's ability to address illicit finance vulnerabilities in the residential real estate sector. The proposed rule exempts involved parties from the Bank Secrecy Act's anti-money laundering program requirements, except for financial institutions obligated to establish such programs.?
Public comments are invited until April 16, 2024.
For more information, visit: https://public-inspection.federalregister.gov/2024-02565.pdf
NCUA to Review CU Overdraft (OD) and Non-Sufficient Funds (NSF) Fee Income and More
On February 7, 2024, NCUA Chairman Todd M. Harper announced at the Brookings Institution that the NCUA will scrutinize credit union compliance with consumer protection laws, focusing on OD and NSF fees. The 2024 review will assess overdraft programs, advertising, balance calculation, and settlement processes, targeting fees that are not reasonable or proportional, systems that authorize overdrafts but settle accounts with insufficient funds, and the imposition of multiple fees in a single day. Additionally, the NCUA plans to increase fair lending examinations, ensure non-discriminatory policies, review flood insurance compliance, and emphasize Bank Secrecy Act compliance and support for small and minority depository institutions.
For more information, visit: https://ncua.gov/newsroom/speech/2024/ncua-chairman-todd-m-harpers-remarks-brookings-institution-agenda-credit-union-regulation
OCC Announces 2024 Workshops for Bank Directors and Senior Managers?
On February 14, 2024, the OCC opened registration for its 2024 in-person workshops for directors and senior management of national community banks and federal savings associations. These examiner-led sessions are designed to enhance community-based financial institutions' operational safety and soundness through practical training and guidance. The OCC's curriculum includes five daylong workshops on management development, risk governance, compliance, credit risk, operational risk, and a half-day workshop on capital markets. Each workshop, capped at 35 participants, offers attendees comprehensive course materials, supervisory publications, and lunch.?
Details on schedules, locations, registration fees, and fee waivers are accessible on the OCC's website: https://www.occ.gov/publications-and-resources/information-for/bankers/community-bank-director-workshops/index-community-bank-director-workshops.html
Treasury Enhances Financial Transparency
On February 14, 2024, the Treasury Department announced initiatives to boost financial transparency and combat illicit finance, focusing on the implementation of the Anti-Money Laundering Act and Corporate Transparency Act. Efforts include:
These measures, part of the Administration's anti-corruption strategy, are supported by the 2024 National Risk Assessments on Money Laundering and Terrorist Financing.
For more information, visit: https://home.treasury.gov/news/press-releases/jy2097
Have questions on any of the topics we covered in the newsletter? Use the link to book time with one of our experts: https://bit.ly/3ulOHue